Provide Answer with Explanation Question:4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec2019 at $99, what will be realised rate of return on bond. Show calculations. (3marks)(sale price-arbitrage free price)Realised Rate of Return=*100arbitrage free price(99-95.9235)Realised Rate of Return=*10095.9235Realised Rate of Return=3.2072%4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec 2019 at $99, what will be realised rate ofreturn on bond. Show calculations. (3 marks) Realised Rate of Return= sale price- arbitrage free price) *100 arbitrage free price99-95.9235 Realised Rate of Return= 100 95.9235 Realised Rate of Return=3.2072%

Answer:To calculate the realized rate of return on the bond when there are no coupon payments, we…

Answered: Question: 4) If the bond is bought on…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 11MC

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